Would it help you as a real estate investor to be able to "Close For Cash in Days," even if you're tapped out financially?
Hard money lenders are perhaps the best way to get 100% financing with easy qualifying, money for fix- up, and fast closings.
So what can hard money lenders do for you? Hard money lenders make relatively short term (12-24 month) loans to real estate investors for the purposes of acquiring the property and rehabbing the property.
These loans are often funded by pools of private investors that have been grouped together into a pool of capital by a lender.
The hard money lender is looking for maximum return, and is willing to take more risk for this return in the form of easier lending standards.
If you strike the right purchase deal, you can even borrow 100% of the purchase price plus some or all of your repair money by using hard money lenders. Here's how it works.
Hard money lenders typically loan 65% of the ARV or After Repair Value of the property when it is repaired or ready for resale.
That 65% loaned by the hard money lender is calculated based on the value of the property AFTER REPAIRS, not as it currently sits, and not based on the price is being paid for the property.
For example, Say that the owner is willing to sell me his house for $60,000. The hard money lender's appraiser agreed with my assessment that the home could be sold for $100,000 once it was fixed up. That appraisal would allow me to borrow 65% of the $100,000, or $65,000. I'm only paying $60,000 for the property, so guess where that extra $5,000 goes?
Unfortunately, not into my vacation fund!
The extra loan proceeds go into an escrow account held by the hard money lender, and I can draw it out as I do repairs.
Remember, hard money lenders are not concerned with your personal credit to the level that traditional lenders are. They're concerned with the property. They know that their loan is fairly secure if you default.
What's bad about hard money loans?
The fees are higher than conventional financing.
Hard moneylenders in my area charge 15% interest, and 5% of the value of the loan in closing costs ("five points").
Thus, on a hundred thousand dollar loan, there would be $5,000 in fees to the lender to close the loan, plus attorney's fees and other charges.
Secondly, the loans usually are only good for 12-24 months. After that time, you have to refinance. If you haven't sold it by then, you have to get a new loan, pay more fees, etc. These are not loans to buy rentals with.
Another disadvantage is the fact that most hard money lenders don't figure the payments on a 30-year basis. The longer the payments stretch out, the cheaper the payment. They figure these loans on 15 or even 10-year terms. Thus, the monthly payment that you must pay is much higher than it would be on a conventional 30 year amortization schedule.
Also, hard money lenders are often more difficult to find than traditional funding sources. As a gift, I have compiled a national list of hard money lenders at my site to solve this problem for you.
Finally, most hard money lenders require a pre-payment penalty that must be paid if you refinance or pay off the mortgage before a given amount of time. Fortunately, this time period is often fairly short. For example, the hard money lender that I use has a two month pre-payment penalty period. Even if I am not going to do much work on the property, and have a contract on it quickly, I can just set up the closing for after the pre-payment penalty expires.
In conclusion, hard money lenders present an attractive option for investors to succeed without having to resort to the late night TV creative hype that we've probably all been exposed to. If you can qualify for traditional financing, and your seller is comfortable with a longer closing window, you may want to stay with conventional financing.
However, if down payment money is tight and your credit is not perfect, or you need to close very quickly, hard money lenders may be a viable solution since they will allow almost anyone who can find a good deal to purchase a property extremely quickly, with less red tape, get money for rehab, and have virtually unlimited access to cash.
**Attn Ezine/Blog editors/ Site owners** Feel free to reprint this article in its entirety so long as you leave all links in place, do not modify the content and include the resource box. If you do use the material, please send us a note. Thank You!
David Wnisnant is a real estate investor and attorney in Atlanta, Georgia who teaches cutting edge real estate tactics specifically designed to increase the number of deals investors find, increase the profits from each deal with less risk. Download Dave Whisnant's FREE 50 state hard money lender list and forever banish the problem of where to find the cash for your deals! Go to http://www.realestateinvestingbrain.com/freehmlist.html
Lincoln Stretch rentals Alsip ..That's right ? are you making enough mistakes in your... Read More
Those who are in the pressure washer business should not... Read More
Most small business owners seek advisors who can help them... Read More
So you want to get into the auto detailing business... Read More
The Service-Disabled Veteran-Owned Small Businesses (SDVOSB) is a program that... Read More
What is in an information plan?Before you even meet with... Read More
Whether you are an Entrepreneur or Business Professional there are... Read More
If you are a franchisee of a large franchise system;... Read More
Franchising Directory Sites-Paid Advertising, Lead Generation for FranchisingFranchising Directory Sites... Read More
You make the decision to go into business and for... Read More
Just as you are about to say "good-bye" to your... Read More
Cash is the lifeblood of any business. As humans need... Read More
Early in my career, I wrote an article for a... Read More
What is a guru?A guru is a teacher. A mentor.... Read More
Small business owners often enter their field with great expectations.... Read More
The FTC- Mighty Federal Trade Commission has unilaterally decided to... Read More
Your business account comes with an ATM, Debit card. Pick... Read More
Should your business have a toll free number for customers... Read More
The difference between rates and wages is not always clear... Read More
With all the cabinet refacing business opportunities out there, you... Read More
The FTC, Federal Trade Commission, is considering modifying the franchise... Read More
Announcements can be handed out as a business cardAnnouncements can... Read More
It is an American dream to own a business. But... Read More
Costs of over regulation and over disclosure end up hurting... Read More
Q: Is the online world the best place to sell... Read More
Western Springs shuttle limo ..Should you buy a business opportunity or Franchise if you... Read More
What kinds of things effect mobile service businesses P and... Read More
Business card size works well for invitations to special events.What... Read More
Most small businesses incorporated in 2005 will fail by the... Read More
If you're organized, smart, capable and willing to work with... Read More
An observation while returning home from a seminar: Getting away... Read More
After over 30 years of participating in hundreds of businesses,... Read More
The choice of financing is an important determinant of whether... Read More
Deciding to start your own franchise is just one of... Read More
To maximum potential profits and dollars in a mobile washing... Read More
Nothing can drive a business down faster than customers who... Read More
1. There Are No "gimmes" ? They count two-foot putts... Read More
How far away is the person you need to meet?We... Read More
When you hear the word "success" does it bring on... Read More
One of the most common horrific mistakes a business can... Read More
Are you thinking of starting a small pressure washer business... Read More
When working from home, it is usual to find that... Read More
Many mobile car wash operators would like to add de-ionized... Read More
What is the best time to expand a mobile car... Read More
Auto detailers are often asked to clean boats and detail... Read More
Entrepreneurs are hardy stock. But sometimes hardiness can get you... Read More
In today's economic climate, the first priority for the small... Read More
How to identify future solutions and opportunities?Your power page, if... Read More
One of the biggest excuses franchisees of home based and... Read More
The American system of business management has been admired and... Read More
Small Business |